Del Frisco's said it was looking to raise up to $100 million in the offering, but it did not disclose the price range or how many shares it will sell. The chain will either list on the Nasdaq or the New York Stock Exchange, but it has yet to pick a ticker symbol.
Del Frisco's of Wichita, Kan., operates 31 restaurants under the Del Frisco's Double Eagle Steak House, Del Frisco's Grille and Sullivan's Steakhouse brands. The chain has plans to open four restaurants this year.
This is not first time that Del Frisco's has attempted to go public. The chain first took a stab at the public markets in October 2007, seeking $100 million in an offering that was supposed to be led by Piper Jaffray & Co. However, the company withdrew its filing a few months later due to disruption in the credit markets at the time.
For the trailing 12 months ended Sept. 6, Del Frisco's posted a net income of $9.9 million on $186.4 million in revenue and an adjusted Ebitda of $33.3 million. Those numbers are compared to a net income of $557,000 on $128.8 million in revenue, and an adjusted Ebitda of $20.8 million for the same time period in 2010.
Despite posting strong numbers, some industry watchers are still not convinced that now is a much better time to go public, given still-lingering uncertainties in the global credit markets. This raises the possibility that Del Frisco's could be running a dual-track process, where it seeks buyers at the same time as an IPO. Such a move would not surprise some investment bankers.
"The flip side of all the public M&A activity is that there is less product for public investors," said one restaurant banker, referring to the increased restaurant M&A activity that is taking some of the logical IPO candidates off the table, thus increasing demand among investors for a restaurant IPO.
"Some of the recent restaurant deals benefited from this; maybe [Del Frisco's] would as well," the banker said.
A couple of the most recent restaurant deals were announced in December when Freeman Spogli & Co. acquired breakfast chain First Watch Restaurants Inc. from Catterton Partners. Terms were not disclosed, but some industry sources valued the deal at around $100 million. Around the same time, Landry's Restaurants Inc. owner Tilman Fertitta picked up Morton's Restaurant Group Inc., another upscale steak house chain, for $117 million in cash. One month earlier, Fertitta purchased McCormick & Schmick's Seafood Restaurants Inc. for $131.6 million in cash.
Del Frisco's has hired Deutsche Bank Securities Inc. and Piper Jaffray as lead bookrunners for the IPO.
Lone Star plans to keep an undisclosed stake in Del Frisco's after the IPO is completed, according to the S-1 filing with the Securities and Exchange Commission. The firm acquired Del Frisco's in 2006 for about $600 million.
Del Frisco's will use $3 million from the proceeds to make a one-time payment to Lone Star and the remainder to pay off its credit facility. The company owes about $71 million under its current loan, as of Sept. 6.
The last notable restaurant chain to go public was Dunkin Brands Group Inc., the operator of the Dunkin' Donuts and Baskin-Robbins chains, which completed its IPO in July 2011 by raising close to $423 million.
Pending IPOs include Mexican-themed chain Chuy's Holdings Inc., which filed to raise up to $75 million in August, and Ignite Restaurant Group Inc., the operator of the Joe's Crab Shack seafood chain, which filed in July looking to raise at least $100 million.
Thompson Hine said partners Roy Hadley Jr. and John Watkins joined its corporate transactions and securities and business litigation practice groups, respectively. For other updates launch today's Movers & shakers slideshow.
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